[Comment]From a currency/ crypto trader

[honestIM]

Trading is a highly stressful but rewarding business. There are a couple of factors that affect trading success rate based upon my years of experience in this industry.

I started currency trading in 2001 and was losing money every single year until 2012. Yes more than 10 years of losing money and fine tuning of my trading method (aka seeking the holy grail to trading).

I am fortunate as during that period of time, IM was easy money. CPA made me enough money to carry on losing money with currency trading and sponsor my living. However the good old days of CPA is gone for now and not sure if it will ever be back in the near future. Not going to debate on this as I am certain that some of you are still successful with CPA but I am just speaking from my experience.

From mid of 2012 I started to consistently make money daily with currency trading. I realized that success in trading only relies upon a few factor. And holy grail is definitely not one of them.

Through years of losing money, I realized that as trader we can only control a few things and whether a trader is going to result in profit or loss will be dependant upon Mr Market (aka luck plays a big part as well).

What we can control:
1) Stop loss
2) Take profit
3) Entry price
4) Exit price
5) Our mentality

What we cannot control:
1) Price direction
2) Prediction of price movement

There is no perfect trading method nor setup. No trading method can give you 100% success rate. Thus what I do is to make sure that each position that I enter results in more than 3 times of my losses. The idea is I just need 1 win to justify three losses to break even. I think this trading concept applies to any trading method that you use bearing in mind that losses are very common and there is no holy grail to trading except if you are doing insider trading (which is illegal anyway).

I tend to make good use of factors that I can control when trading. Especially mentality. If I lose 3-4 times in a row. I stop for the day and head for my spa session to relax. This usually means that the market is in choppy condition thus not suitable for trading. It is not worthwhile to try to enter any position at this stage.

If I noticed that when good news are released by price is not moving up much, it means that the market expectation is met thus resistance on price is strong therefore it is highly unlikely that the price will move higher. Time to take a bet on the opposite direction in this case. Usually the price would have gone up a lot at this stage so the risk exposure is lower. I capped my stoploss at 10 pips max. So if I am wrong, I don't lose too much. Control of losses is very important.

Taking profit is also important since we do not own Mr Market. From my years of experiences, it is important to know that market turns (and turns fast). From profits to losses can happen within a period of 5min if you are not careful.

What I do is this, I adjust my stop loss the moment price appreciate x pips to my break even point. And then setup a trailing stop loss. However I do not depend upon trailing stop loss totally. I make adjustment to trailing stoploss as price move positively towards my direction of trading. Example, I start off with 30pips and price move up by 15pip, I adjust my stop loss to cover 15pip of profits to protect my profit. When trailing stop loss is triggered at 30pips, I readjust my trailing stoploss to 10 pips as it is unlikely the price will move more towards my bet direction.


Trading is not like investing whereby you invest and wait. You need to move to take control on the factors that are within your control.

What I like about trading is that there are no customer service, marketing, advertising involved. There is always ready buyer and seller. Only difference lies in the pricing. My thinking is this, trading is different from gambling as the outcome (aka profits) can be multiple fold.

Gambling:
You bet one, you lose one and you win less than one (as you need to pay the house)

Trading:
You bet one, you lose one but you can potentially win more than one (in my case usually three or more, sometime I hit 9 fold ROI).

In terms of ROI:

Gambling: You need to have at least 80% winnings to be profitable (which is impossible unless youdo card counting or extremely lucky)

Trading: 20% winning to be profitable. As certain trades will result in more than 3 fold returns.

In the long run trading would be profitable as long as you stick to ONE trading method and maintain consistency in your trading method.

If your a newbie trader, do not be blinded by greed or expectation on profits. Focus on your potential losses. What can you afford to lose?

 

[Sherb]

Gambling: You need to have at least 80% winnings to be profitable (which is impossible unless youdo card counting or extremely lucky)

Trading: 20% winning to be profitable. As certain trades will result in more than 3 fold returns.

I was with you until these two lines. Where it went from a personal account to pulling-numbers-from-the-ass.

 

[honestIM]

I was with you until these two lines. Where it went from a personal account to pulling-numbers-from-the-ass.

I think if you trade, you can see that this is a fact and not pulling number from the air. The problem is that bulk of the trader refuse to cut their losses systematically. And ride on their profits. Let me quote you an example.

Time: 2017.09.26 21:41:42
Price Sold: 1.34559
Sold: 1.33757

This was an actual trade done yesterday by me. As to which currency pair, if you are a trader you should be able to see it yourself. For this trade alone, it can cover 8 times of my losses. Which means I need to lose another 8 times to break even.

 

[kingdombunniez]

Did you learn it yourself? I know you said you have been trading since 2001, which is quite long so it also means you have a lot of experience. I have been dabbling, more like a hobby in the cryptocurrency but don't have the time yet to trade active, which is a goal of mine somewhere in the future

Are there books, guides, sites which you can recommend? I have been following data dash on youtube which I learn quite a lot from.

 

[honestIM]

Did you learn it yourself? I know you said you have been trading since 2001, which is quite long so it also means you have a lot of experience. I have been dabbling, more like a hobby in the cryptocurrency but don't have the time yet to trade active, which is a goal of mine somewhere in the future

Are there books, guides, sites which you can recommend? I have been following data dash on youtube which I learn quite a lot from.

I started trading because of greed and perception of easy money (similar to CPA). This i have to be very honest. The journey to making money from trading was much longer and tougher than my assumption. I started with babypips, forexfactory,etc. But to be honest, those methods learned creates even more confusion and result in more losses as I keep jumping from methods to methods as my losses starts to accumulate. Basically the more I lose the more I switch method of trading. Blaming the method and trying to find the magic formula to trade and win money.

Use a simple method and focus on things that you can control.

 

[issorc]

I think if you trade, you can see that this is a fact and not pulling number from the air. The problem is that bulk of the trader refuse to cut their losses systematically. And ride on their profits. Let me quote you an example.

Time: 2017.09.26 21:41:42
Price Sold: 1.34559
Sold: 1.33757

This was an actual trade done yesterday by me. As to which currency pair, if you are a trader you should be able to see it yourself. For this trade alone, it can cover 8 times of my losses. Which means I need to lose another 8 times to break even.

You say you aim to win 3 times your losses of a single trade and sometimes that goes up to 8 or even 9 times. I'm still missing how you came up with 20% without pulling numbers fron the air. Same for the 80% you at least need to win to make money in gambling.

 

[honestIM]

You say you aim to win 3 times your losses of a single trade and sometimes that goes up to 8 or even 9 times. I'm still missing how you came up with 20% without pulling numbers fron the air. Same for the 80% you at least need to win to make money in gambling.

I see where the commotion lies. Win lose ratio is based upon 80/20 principle. Not cast in concrete as I do not have statistical fact with gambling. Anyone who gamble and make a living can prove me wrong on this. The only person that I saw winning is those poker players that bet against other players and not with the house.

 

[honestIM]

Just a little additional based upon my actual trading journal to quash some of you that doubts the legitimacy that I am trading. And I have uploaded the screenshot directly from MT4 so there is no chance of photoshopped fake proof of trading.

If you refer to the chart above, from 14 sept to 22 sept period. Total trades done was 9 trades. Total losses, 30 pips. Total gross profits, 388 pips. Net profits 358pips.
This is what I meant by consistency with trading. You keep your losses fixed and method of trading consistent. But let your profits run. This is different from gambling. Same concept applies to crypto trading.

I want to make it very clear that I DO NOT KNOW THE TREND of the movement. I am not predicting nor anticipating. I am just positioning my trade and wait for Mr Market to deliver. If I am wrong, I get out. If I am right, I take profit. I am not any smarter than anyone out there in terms of trading. I do not control nor have the ability to forecast market movement.

 

[davids355]

You lost me to be honest, but I know it’s possible to make money reliably in trading, I know a few people that make a lot doing this sort of thing.

I think there is always a risk though.

I’m sticking just to bitcoin as a long term punt, rather than any sort of day trading style.

And as far as gambling is concerned Just blackjack

 

[honestIM]

You lost me to be honest, but I know it’s possible to make money reliably in trading, I know a few people that make a lot doing this sort of thing.

I think there is always a risk though.

I’m sticking just to bitcoin as a long term punt, rather than any sort of day trading style.

And as far as gambling is concerned Just blackjack

Blackjack if you do card counting then you can beat the house. However you need a team to do this. And it only works for short terms since casino is fast to track these card counters. I am not sure how Casino can monitor people that count cards with online betting house though.

If you are investing stick with that method which makes you money. I am not saying that trading is easy money. It is not. I lost a lot before finally understanding the fact that I cannot control nor anticipate the market. As trader we get rewarded for taking risk. As investor you get rewarded for making the right decision on the fundamental of the asset that you are investing.

 

[Magic555]

When i first started crypto trading i got hooked on to and almost addicted to day trading.
This was a huge mistake as i lost amost 50% out of the $1k i invested eventually even though i had made upto $3k within a few weeks.
With proper planing long term trading can be very profitable though. I know people who trade really high numbers. Then again its their livelihood.

 

[silverleafy]

i did some trading , lost around 100 $ so far : /

 

[davids355]

Blackjack if you do card counting then you can beat the house. However you need a team to do this. And it only works for short terms since casino is fast to track these card counters. I am not sure how Casino can monitor people that count cards with online betting house though.

If you are investing stick with that method which makes you money. I am not saying that trading is easy money. It is not. I lost a lot before finally understanding the fact that I cannot control nor anticipate the market. As trader we get rewarded for taking risk. As investor you get rewarded for making the right decision on the fundamental of the asset that you are investing.

Yea, and its becoming impossible anyway now that they have those new card shuffling machines (At least in the UK they do) where the cards are randomly shuffled in among each other each time a hand is put back in the machine.

But I still like the game, if you play it perfectly then I think even though the odds are in favor of the house still you can bring them pretty near to zero. Then its a bit of skill and a bit of luck.

But yea, I am not saying what you do is not good, I think its amazing if you can work with all those numbers and make money trading crypto, for me its beyond my brain power

 

[honestIM]

Yea, and its becoming impossible anyway now that they have those new card shuffling machines (At least in the UK they do) where the cards are randomly shuffled in among each other each time a hand is put back in the machine.

But I still like the game, if you play it perfectly then I think even though the odds are in favor of the house still you can bring them pretty near to zero. Then its a bit of skill and a bit of luck.

But yea, I am not saying what you do is not good, I think its amazing if you can work with all those numbers and make money trading crypto, for me its beyond my brain power

Trading crypto is actually lesser stress compared with currency since currency can be crazy at times in terms of market movement. For Crypto i usually uses a 30 day holding period. And so far, it has worked really well for me as the bubble keep getting bigger. The bubble will eventually burst but it does not really matter since I would have already make my million from there. I am close to half a million now so hopefully before the bubble burst I can hit more than one million in cash (not crypto).

 

[honestIM]

When i first started crypto trading i got hooked on to and almost addicted to day trading.
This was a huge mistake as i lost amost 50% out of the $1k i invested eventually even though i had made upto $3k within a few weeks.
With proper planing long term trading can be very profitable though. I know people who trade really high numbers. Then again its their livelihood.

Day trading crypto is too difficult in my personal opinion (not a fact). Try a 30 day holding period. You will be surprise with the effectiveness of this method. Remember profits are not really profit for crypto until you change it to cash. Remember this as a fact so that you do not lose when eventually authorities start banning unauthorised crypto usages. Tech for crypto is here to stay for sure. But not sure how many of these crypto will still be around and legit for converting into cash later on.

i did some trading , lost around 100 $ so far : /

Trading on? Currency or crypto? If you are trading stocks, I suggest that you invest rather than trade. As good companies will rise in value no matter the market condition.